Sole trader - is depreciation on a computer 3 years or 8 years?

joconnell

Heya Folks,

I'm a sole trader and as such I've always depreciated any major assets like office bits, computers and camera equipment over 8 years but I've read in various posts that computer equipment should be done over 3 years, or the "useful life" of the equipment. I work in computer effects so I'd have to upgrade bits maybe every 4 / 5 years to keep up with the increasing demands of work quality, so which would depreciation term is correct here? Is there a separate section in ROS when doing my annual income tax for these quicker depreciating assets?

Cheers!

John

Into The Blue

joconnell wrote: »

Heya Folks,

I'm a sole trader and as such I've always depreciated any major assets like office bits, computers and camera equipment over 8 years but I've read in various posts that computer equipment should be done over 3 years, or the "useful life" of the equipment. I work in computer effects so I'd have to upgrade bits maybe every 4 / 5 years to keep up with the increasing demands of work quality, so which would depreciation term is correct here? Is there a separate section in ROS when doing my annual income tax for these quicker depreciating assets?

Cheers!

John

I write them off over 3

CIARAN_BOYLE

joconnell wrote: »

Heya Folks,

I'm a sole trader and as such I've always depreciated any major assets like office bits, computers and camera equipment over 8 years but I've read in various posts that computer equipment should be done over 3 years, or the "useful life" of the equipment. I work in computer effects so I'd have to upgrade bits maybe every 4 / 5 years to keep up with the increasing demands of work quality, so which would depreciation term is correct here? Is there a separate section in ROS when doing my annual income tax for these quicker depreciating assets?

Cheers!

John

Theres a difference between accounting depreciation (useful life) and tax capital allowances (8 years).

You may be mixing these up.

Aimead

My understanding is you can only write it off before the 8 years if you dispose of it. That’s what we do.

joconnell

CIARAN_BOYLE wrote: »

Theres a difference between accounting depreciation (useful life) and tax capital allowances (8 years).

You may be mixing these up.

Yes, I likely am. My computer for example will need to be upgraded after 4 or 5 years as it'll no longer be quick enough for the work I do. I'm currently writing this off over 8 years but depreciation over the 4 / 5 years would make more sense - there's lots of variation in opinions about the likes of this, do you have any links to revenue's policy on assets depreciated over useful life?

Cheers!

CIARAN_BOYLE

joconnell wrote: »

Yes, I likely am. My computer for example will need to be upgraded after 4 or 5 years as it'll no longer be quick enough for the work I do. I'm currently writing this off over 8 years but depreciation over the 4 / 5 years would make more sense - there's lots of variation in opinions about the likes of this, do you have any links to revenue's policy on assets depreciated over useful life?

Cheers!

Assets are always exposed to capital allowance over 8 years. If you produce a set of accounts you should have depreciation over the useful life. Then in your form 11 you can have net profit per accounts add depreciation for adjusted net profit and subtract capital allowances over 8 years.

much easier to just write everything off for accounts over 8 years as that is the relevant taxable amount.

joconnell

Much appreciated Ciaran.